Student loans can seem like such a dirty word, especially if you’re just starting out and not accustomed to paying toward them each month. The large amount of money you owe can seem daunting and impossible to ever tackle, but it is possible to pay off student loans without going broke!
There are a few things you’ll need to do to ensure you can pay off student loans in a timely manner, without putting yourself in a dangerous financial situation.
Here are 7 ways to pay off student loans without going broke:
Never ignore payments. Life happens, and if you’re still just starting out in your career, it can be tough to have it all together. We get that you’re likely not a financial genius just yet. However, a lot of people tend to push loan payments until after all other bills are paid that month, which can result in not enough funds to pay for them. Never ignore these payments, and treat them just like any other bill! No, your power won’t turn off if you forget to pay your student loan, but pretend it will! The negative implications will come back to haunt you later, even if you don’t see them right away.
Know when payments are due. Many people don’t know when their grace period is up and when they’re required to begin paying back student loans. That grace period can be a great thing, especially as you’re getting started and finding a career, but always keep a pulse on it! Set a reminder for the first payment due date, and consider setting reminders each month after that. Introducing a new payment each month can be tough if it’s not something you’ve been budgeting for each month.
Use auto pay. The best way to ensure you never forget a payment again? Enroll in auto pay! This will make sure your payments are getting taken out as soon as they need to and you’re not having to worry about forgetting or paying late.
Don’t extend your repayment period. Extending your payment window can seem tempting and even cut down your monthly payment, but this also increases the interest by a hefty amount and means you’ll end up paying way more over time. Instead of extending your payment window, cut back on other costs and make more room in your budget to make sure you’re paying what you need to on your loans.
Contact your lender before making additional payments. Paying more than 12 payments in a year can help you pay off your loan much quicker, and is definitely something we recommend if you can afford it. However, be sure to specify with your lender that you’d like to apply the extra payment to principal only, rather than next month’s payment. Without this specification, your lender will apply the excess payment to the next month’s payment, meaning even more interest.
Pay more than the minimum payment due. While you may hurt yourself by making extra payments, you can pay more than the minimum each month. However, make sure you’re only doing this when you can truly afford it. If you get a large tax return or you get a large bonus at work, put some of that money toward it. But never put money toward it if it means risking your financial security.
Refinance your loan. Refinancing your student loan can mean a lower interest rate for you and even paying off your loan sooner. Who doesn’t want that?! Just be sure to apply to a few different lenders at the same time to ensure you’re getting the best deal available.
If paying off your student loans early is a goal of yours, head to the Wela app and make sure we know! We’ll set a Daily Spend Limit for you and give you tips to meet this goal soon.
Want to hear some of these tips explained in just one minute? Check out this video: